Second Circuit rules VT immune from FLSA lawsuits

Earlier this week, the U.S. Second Circuit Court of Appeals held that employees of the State of Vermont could not sue Vermont for violations of the employees’ rights under the Fair Labor Standards Act (FLSA). FLSA is a federal law that requires, among other things, employers to pay non-exempt employees overtime pay.

The case against Vermont centered around whether the employees were exempt from overtime pay requirements. It was undisputed that the Vermont employees would be entitled to overtime pay if they were not paid on a “salary basis.” Under federal regulations, an employee is generally considered to be paid on a salary basis only if her pay “is not subject to reduction because of variations in the quality or quantity of the work performed.” The Vermont employees argued that Vermont could not satisfy this standard because, among other reasons, their pay fluctuated based on the amount of time they worked.

The Court held, and Vermont did not dispute, that Vermont must comply with the overtime requirements of FLSA. However, the court held that employees of Vermont could not enforce their rights in court because Vermont, as a state, enjoys “sovereign immunity” from employees’ FLSA lawsuits even when Vermont has violated their rights.

This “sovereign immunity” doctrine is not new. While states enjoy some immunity from lawsuits based on the Eleventh Amendment to the Constitution, the sovereign immunity at issue in this case is not found in the Constitution or any statute. Instead, it is a judge-made rule that protects states from lawsuits.

Because of the doctrine of “sovereign immunity,” only the federal government would have the ability to hold Vermont accountable for violating its employees’ FLSA rights. If it does not make sense to you why the federal government should be able to sue to enforce the rights of Vermont’s employees but the employees themselves cannot, you are not alone. Many scholars have criticized the sovereign immunity doctrine as an example of judicial overreach.